Football League clubs at odds with each other over Premier League payment plan

Football League clubs will hold an emergency meeting on Thursday to discuss
their concerns over Premier League plans to change the way it distributes
money to the lower divisions, Telegraph Sport can disclose.

Down but not out: Hull City fan looks dejected after ther defeat to Sunderland on SaturdayPhoto: PA

The proposals, under which parachute payments would rise to £48 million payable over four years, and there would be significant increases in "solidarity payments" to the rest of the League, have met stiff opposition among some clubs.

The issue is understood to have divided the League's board in recent weeks, and poses a major challenge to the leadership of new chairman Greg Clarke, who will face all 72 clubs on Thursday for the first time since he succeeded Lord Mawhinney.

Clarke is understood to be broadly supportive of the proposals, which could deliver more than £170 million excluding parachute payments over the next three years.

Despite this, a number of clubs, including Sheffield United, Sheffield Wednesday and Derby County, are understood to have reservations about the plans.

While increased funding to the Football League is broadly welcome, the impact of the changes on the delicate balance of the three divisions is a major concern. Some clubs fear that the competitive balance of the Championship would be disturbed by the changes, and that the gap between relegated clubs and the rest would be entrenched by paying clubs over four years.

"There is a danger that giving the extra money over four years you will effectively create a 'Premier League 2' in all but name," said one chairman opposed to the plans.

"By giving the money over four years you will end up with 12 to 14 clubs who compete for promotion to the Premier League and eight to 10 who have got no chance."

Clubs in League One and League Two also fear that the proposal would shift the equality gap in the English game further down the divisions, making it harder for them to compete in the Championship. There are also concerns that the proposals, which are conditional on the Football League adopting new governance rules and committing to improving facilities, will endanger the independence of the league.

"This issue is always divisive, and while it may seem strange to be arguing when someone wants to give you money, there are strings attached that we are going to find difficult to accept," said another source.

One condition of the deal is that the League commits to revealing the identity of all owners, a contentious issue at Leeds United and Notts County this season, and the Premier League is also proposing to play a greater role in the Football League Trust, which it part-funds to help youth development and community projects. Some sources have suggested it wants to re-brand it as the Premier League Trust.

The proposals are an attempt by Premier League chief executive Richard Scudamore to contribute to the Football League while meeting concerns among middle-ranking clubs such as Bolton about the price of relegation, and making it easier for Championship clubs to bridge the gap.

He has been able to offer a major increase thanks to an 80 per cent rise in the value of the new overseas television deal that is the major contributor to Football League dispersals. Parachute payments are calculated on a formula based on overseas TV revenue and other income shared equally by the Premier League.

Previously relegated clubs have been offered one equal share of this income paid over two years, currently £22 million in two equal instalments. Under the new settlement the Premier League is offering a parachute payment of one-and-a-half shares, payable over four years.

This would mean relegated clubs would each receive £48 million in total, with £16 million in each of the first two years and £8 million in the next two. The Premier League has argued that the four-year plan helps "smooth out" the imbalance, but several clubs would prefer it paid in two larger instalments.

Solidarity payments would also increase in all three divisions. Every Championship club not in receipt of parachute payments would get £2.2 million per season, three times the £830,000 each club received this year.

The payment would almost match the average annual payment to Championship clubs from the Football League of £2.4 million, taking the total guaranteed income to £4.6 million.

In League One, each club would get £325,000, a total of £7.8 million a year, and in League Two £250,000, a total commitment of £6 million.

While the money would be welcomed by some at the bottom end of the Football League the implications of the injection trouble many chairmen.

Currently League One clubs receive around £650,000 from the Football League, and the £350,000 solidarity payment would swell that to £1 million. With Championship clubs guaranteed £4.6 million however, they fear a £3.6 million gap is unbridgeable.

For all their concerns expediency is likely to guide many clubs on Thursday.

While some would like to pick and choose from the offer, the Premier League is likely to insist that they accept the whole package, and few clubs will be in a position to turn down the money on offer.

Thursday's meeting comes ahead of the final week of the Championship season, and with Hull, Burnley and Portsmouth adapting their budgets to cope with life in the second tier.

Notwithstanding Portsmouth's administration, all three can look forward to a major increase in parachute payments as a result of the Premier League plan.

The fear for those attempting to follow them into the top division next season is that they would be unable to compete as long as relegated clubs, even those who enjoyed only a single season in the sun, benefit from a four-year subsidy from their failure to stay there.

How the payment system works

Parachute payments to the Football League are decided using a formula based on all income that is shared equally by Premier League clubs. That includes 50 per cent of domestic broadcast revenue, all overseas broadcast revenue, and central commercial income, including Barclays’ title sponsorship.

Increases in all these deals for the 2010-2013 cycle have pushed this pot of money close to £2 billion, delivering an increase for clubs relegated to the Football League.

Parachute payments £48m over four years for clubs relegated from the Premier League. Clubs would receive £16m in each of the first two years, and £8m in each of the following two.

Championship Clubs not receiving parachute payments would get £2.2m a year, a total of £46m a year.